Replies to post #745112 on Fannie Mae-No Politics (FNMA)

[familymang]

How could the market determined EV ever put JPS (or common) ITM with the snr pfd LP increasing every Q? GSEs are worth at max $300b? Whats left for anyone but the LP as is. Can you imagine a scenario where this isnt the case?

[Ace Trader]

Why would I and everyone else holding JPS $25’s and $50’s cash in for common stock worth $3 to $5 ???

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Receivership and an associated Chapter 11 is definitely a viable option. That's one of the reasons why the JPS are trading where they're at. There are so many different ways to re-org the GSEs...I could spend hours writing about different scenarios. I will say this, the cleanest way is to quietly get 2/3s of all issues of the JPS to agree to a common conversion or a common w/warrants conversion. It's the same tactic companies use with bond holders when they prepare pre-packaged bankruptcies.

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As per written contracts between the companies and JPS holders park is par! The companies can NOT convert to anything less in a Chapter 11 or bankruptcy! We get Par !!!!!

[familymang]

Or alternatively, if the market determined the EVs of the companies put the JPS in the money.

In your restructuring experiences how would EV be calculated here, would accumulated net worth have to be factored in?

For example if the market value of the operating biz for the GSEs were $250b, would the total value be $344b? ($250b+$94b of net worth today?) If so does that mean for the JPS to be "ITM" the total valuation for the operating biz needs to be > $194b, or >$227b for full recovery? ($288b LP - $94b net worth + $33b for JPS)

Or would the bogey for JPS to be ITM always be the snr pfds LP ($288b today and increasing every Q)?